--- title: "Part VIII, Subpart iv, Chapter 3, Section D Monitoring Income for Veterans in Receipt of Individual Unemployability (IU)" document: "M-21-1" section: "Part VIII, Subpart iv, Chapter 3, Section D" canonical: "https://veteranai.co/va-regulations/m21-1/viii.iv.3.d-monitoring-income-for-veterans-in-receipt-of-individual" source: "https://www.knowva.ebenefits.va.gov/system/templates/selfservice/va_ssnew/help/customer/locale/en-US/portal/554400000001018/content/554400000177477/M21-1-Part-VIII-Subpart-iv-Chapter-3-Section-D-Monitoring-Income-for-Veterans-in-Receipt-of-Individual-Unemployability-IU" updated: "2026-09-07T14:37:39.558376Z" --- August 12, 2022 ### VIII.iv.3.D.1.a. Monitoring Changes in Employability Status Changes in the employability of Veterans for whom entitlement to individual unemployability (IU) is established are monitored through a yearly Social Security Administration (SSA) wage data match. * A Veteran who is identified as having verified earned income over the poverty line and is also in receipt of IU will be sent a due process letter and [_VA Form 21-4140, Employment Questionnaire_](), with an accompanying [_VA Form 21-4138, Statement in Support of Claim_](), via the Hines Information Technology Center (ITC). * The Veteran will be required to identify and explain earned income via return of [_VA Form 21-4140_](). **Note:** The yearly SSA wage data match identifies **_family or household_** income that is in excess of poverty level. **References:** For more information on * monitoring changes in employability status, see [_Individual Unemployability Certification Process Frequently Asked Questions_]() * periodic certification of continued eligibility, see [38 CFR 3.652]() * automated monitoring for income and development for [_VA Form 21-4140_](), see M21-1, Part VIII, Subpart iv, 3.D.1.c * RO dispatch and control for the return of [_VA Form 21-4140_](), see M21-1, Part VIII, Subpart iv, 3.D.1.d, and * handling information from a Veteran explaining other sources for wages reported in the data match, see M21-1, Part VIII, Subpart iv, 3.D.2.e. ### VIII.iv.3.D.1.b. Discontinuance of Monitoring for Changes in Employability Status Monitoring changes in employability status is not required when the Veteran * has _not_ been identified in the SSA data match as having verified earned income above the poverty line * has an IU rating that has been in effect for 20 or more continuous years, or * has had an IU rating replaced with a 100-percent schedular evaluation. **Notes:** * Monitoring for changes in employability status is not necessary if a discontinuation of IU would not alter the claimant’s benefit entitlement. In this situation, development for [_VA Form 21-4140_]() may be discontinued. * A review of the rating _Codesheet_ , particularly the special monthly compensation (SMC) paragraph text entries, will reflect whether payment of SMC is contingent on a grant of entitlement to IU. When payment of SMC is contingent on a grant of entitlement to IU, continued monitoring of employability status is required even in spite of the presence of a 100-percent schedular evaluation. **References:** For more information on * protection of evaluations, see [38 CFR 3.951(b)](), and * entitlement to SMC associated with IU, see [M21-1, Part VIII, Subpart iv, 3.C.4.e](). ### VIII.iv.3.D.1.c. Automated Monitoring for Income of Veterans in Receipt of IU Veterans in receipt of IU are monitored for receipt of earned income by an SSA data match. The table below describes the automated monitoring process. When the automated process cannot occur, refer to M21-1, Part VIII, Subpart iv, 3.D.1.d for procedures to follow. _ _ | **Step** | **Action** 1 | Upon receipt of wage files from SSA, Hines ITC will run a data match to identify those Veterans receiving IU who are shown to have verified earned income over the poverty line. 2 | Hines ITC will automatically generate and send a notice of proposed adverse action letter with an attached [_VA Form 21-4140_]() and [_VA Form 21-4138_]() to the identified Veterans. 3 | Hines ITC will * batch establish an end product (EP) 600 with the claim label _Predetermination – Rating Issue_ to control for the return of [_VA Form 21-4140_]() and the due process period * set a suspense date for 65 days from the month the due process letter is issued by Hines ITC, and * add the special issue _Annual Eligibility Report_ to each claim in the batch process. **Important:** Claims processors should add this special issue flash if it was not automatically added by Hines ITC. 4 | Upon expiration of the suspense date, refer to M21-1, Part VIII, Subpart iv, 3.D.2 for actions to take based on receipt or non-receipt of [_VA Form 21-4140_](). ### VIII.iv.3.D.1.d. RO Dispatch and Control for Return of VA Form 21-4140 Claims identified in the income match that cannot be batch processed by Hines ITC will require manual review and action by the regional office (RO). Follow the steps in the table below for dispatch and control of [_VA Form 21-4140_]() by the RO when Hines ITC cannot perform batch processing. | **Step** | **Action** 1 | The Office of Field Operations (OFO) sends an annual e-mail to RO leadership of cases in its jurisdiction (based on the Veteran’s address) in which the Veteran * has been identified as being in receipt of income above the poverty threshold, _and_ * is in receipt of individual unemployability, _but_ * did not receive due process through the batch process. 2 | The RO will * establish EP 600 with the claim label _Predetermination – Rating Issue_ * ensure the SUPPRESS ACKNOWLEDGEMENT LETTER checkbox is selected so the Hines ITC-generated acknowledgement letter is not automatically sent to the Veteran, and * add the special issue _Annual Eligibility Report_. 3 | Provide the Veteran with due process to propose to discontinue entitlement to IU based on receipt of earned income by sending the Veteran notice of proposed adverse action and including _[VA Form 21-4140]() _and _[VA Form 21-4138]() _using the _IU Eligibility Review Due Process_ letter. 4 | Utilizing a suspense date of 65 days, establish tracked items for * due process, and * return of [_VA Form 21-4140_](). 5 | Provide an e-mail response to OFO confirming that due process was sent on identified claims. 2. Handling _VA Form 21-4140_ #### This topic contains the procedures for procedures for handling _VA Form 21-4140_ , including * handling failure to return _VA Form 21-4140_ * receipt of _VA F_ _orm 21-4140_ following discontinuation of IU * reviewing responses received on _VA Form 21-4140_ * handling _VA Form 21-4140_ returned with * no reported wages * reported Veteran wages, and * sufficient explanation of income, and * sufficiency of notice of proposed adverse action August 12, 2022 ### VIII.iv.3.D.2.a. Handling Failure to Return VA Form 21-4140 Follow the steps in the table below for procedures to follow when the Veteran does not return [_VA Form 21-4140_](). | **Step** | **Action** 1 | Refer the claims folder to the rating activity. 2 | Prepare a rating decision reflecting reduction to the schedular evaluation effective the date indicated in the LAST PAID DATE field on the AWARD INFORMATION tab in Share (see [38 CFR 3.501(f)]()) or the date specified in the notice of proposed adverse action, whichever is later. **Important:** If entitlement to Dependents’ Educational Assistance (DEA) or SMC was previously established based on the grant of IU, address DEA in the rating if otherwise warranted. 3 | Refer the claims folder to the authorization activity to reduce the award. * Notify the Veteran of the reduction and any loss of entitlement to DEA or SMC. * Advise the Veteran that if the Department of Veterans Affairs (VA) receives evidence showing continued unemployability within one year of the date of the decision notice, IU will be restored from the date of the reduction. * Advise the regional processing office (RPO) of jurisdiction of the loss of entitlement to DEA if a [38 U.S.C. Chapter 35]() record exists under the Veteran’s claim number. **Reference:** For more information on RPO * jurisdiction, see [M22-4, Part III, 1.02](), and * e-mail addresses, see [M21-1, Part XIII, Subpart i, 1.B.3.b.](). ### VIII.iv.3.D.2.b. Receipt of VA Form 21-4140 Following Discontinuation of IU If the Veteran provides a completed [_VA Form 21-4140_]() after the notification of IU discontinuation is sent, accept [_VA Form 21-4140_]() as a prescribed form for a claim for IU, as described in [M21-1, Part II, Subpart iii, 1.A.1.a](), and revise the prior decision, as warranted, in accordance with the facts found. **Reference:** For more information on periodic certification of continued eligibility, see [38 CFR 3.652](). ### VIII.iv.3.D.2.c. Reviewing Responses Received on VA Form 21-4140 A [_VA Form 21-4140_]() and [_VA Form 21-4138_]() are sent only to Veterans identified in the wage data match as having received income. The notice of proposed adverse action sent by Hines ITC asks the Veteran to explain the income and provide documentation of the income source. When a Veteran returns [_VA Form 21-4140_](), the income must be explained as requested in the notice of proposed adverse action. * Analyze all submitted evidence in accordance with [M21-1, Part V, Subpart ii, 1.A]() to determine whether the evidence continues to show the Veteran is incapable of gainful employment. * The Veteran must submit evidence that documents the source of the reported income for the applicable scenario. For example, if the income is * spousal income and taxes were filed jointly, a Veteran must submit documentation of the income source such as a spouse’s _Form W-2_ , _Wage and Tax Statement_ , or * the result of the Veteran’s employment and the Veteran is * no longer employed, the Veteran must submit evidence documenting the cessation of employment such as a statement from the former employer providing the date of termination, or * currently employed, but employment has not been for a continuous year, the Veteran must submit evidence explaining employment status such as a statement from the employer stating the dates employed. * Review [_VA Form 21-4140_]() provided by the Veteran to determine if additional clarification is needed. If a signed [_VA Form 21-4140_]() is received but necessary information, such as wage data, is missing or requires clarification, it is permissible to telephone the Veteran to obtain the clarifying information orally and document any contact with the Veteran on [_VA Form 27-0820_](). * If Veterans fail to check the _No_ box, indicating that they have not worked, but sign the [_VA Form 21-4140_](), indicating that they have not been employed by VA or others or self-employed at any time during the previous 12 months, claims folders should still be referred to the rating activity as described in the table below. * A phone call to the Veteran cannot be used to substitute for a signature on [_VA Form 21-4140_](). * Although [_VA Form 21-4138_]() is provided to the Veteran and will often prove helpful in explaining the income source * a Veteran’s statement, without adequate documentation, is generally not sufficient to verify the source of the income, and * submission of [_VA Form 21-4138_]() is not required as a part of the Veteran’s response. Refer to the table below for procedures for handling the response submitted by a Veteran on [_VA Form 21-4140_](). | **If the Veteran ...** | **Then ...** * returns a signed [_VA Form 21-4140_]() * checks the block indicating unemployment has continued for the past 12 months, and * does not provide an explanation and documentation detailing the source of the income | consider the response a fraudulent response and follow the procedures in M21-1, Part VIII, Subpart iv, 3.D.2.d. * returns a signed [_VA Form 21-4140_]() * checks the block indicating unemployment has continued for the past 12 months, and * provides an inadequate explanation and/or insufficient documentation detailing the source of the income with no indication of a return to work | follow the procedures in M21-1, Part VIII, Subpart iv, 3.D.2.d. * returns a signed [_VA Form 21-4140_](), and * confirms a return to work | follow the procedures in M21-1, Part VIII, Subpart iv, 3.D.2.e. * returns a signed [_VA Form 21-4140_]() * checks the block indicating unemployment has continued for the past 12 months, and * provides an adequate explanation detailing the source of the income | follow the procedures in M21-1, Part VIII, Subpart iv, 3.D.2.f. **Note:** When a Veteran reports employment that is characterized by temporary interruptions in work status, such as a customary seasonal break that is characteristic of that job or occupation, but is otherwise continuous employment, follow the guidance in [38 CFR 3.343(c)(2)](). ### VIII.iv.3.D.2.d. Handling VA Form 21-4140 Returned With No Reported Wages Follow the steps in the table below when a Veteran returns [_VA Form 21-4140_]() and does not * indicate a return to work, and/or * provide a sufficient explanation of wages. | **Step** | **Action** 1 | Refer the claims folder to the rating activity. 2 | Prepare a rating decision * reflecting reduction to the schedular evaluation effective the date indicated in the LAST PAID DATE field on the AWARD INFORMATION tab in Share (see [38 CFR 3.501(f)]()) or the date specified in the notice of proposed adverse action, whichever is later, and * explaining in the rating narrative that the reason for the rating reduction is failure to provide requested evidence. **Important:** If entitlement to DEA or SMC was previously established based on the grant of IU, address DEA in the rating if otherwise warranted. 3 | Refer the claims folder to the authorization activity to reduce the award. * Notify the Veteran of the reduction and any loss of entitlement to DEA or SMC. * Advise the Veteran that if VA receives evidence showing continued unemployability within one year of the date of the decision notice, IU will be restored from the date of the reduction. * Advise the RPO of jurisdiction of the loss of entitlement to DEA if a [38 U.S.C. Chapter 35]() record exists under the Veteran’s claim number. * Add the corporate flash, _Annual IU Eligibility Review-Fraud_ , to the claim. ### VIII.iv.3.D.2.e. Handling VA Form 21-4140 Returned With Reported Veteran Wages Refer to the table below for procedures for handling the Veteran’s report of income and employment information on [_VA Form 21-4140_](). | **If the Veteran returns _VA Form 21-4140_ and ...** | **Then ...** indicates possible gainful employment for 12 months or more | follow the steps in the table below. | **Step** | **Action** 1 | Refer the claims folder to the rating activity. 2 | The rating activity will review [_VA Form 21-4140_]() and all other evidence of record to determine whether discontinuation of entitlement to IU is warranted. The rating activity must consider whether * the employment is sustained, gainful employment or marginal employment, and/or * an examination is necessary to evaluate employment status or employability. **References:** For more information on * discontinuing entitlement to IU, see [38 CFR 3.343(c)]() * requesting examinations in IU claims, see [M21-1, Part VIII, Subpart iv, 3.B.2.b]() * the definition of * substantially gainful employment, see [M21-1, Part VIII, Subpart iv, 3.A.2.b](), and * marginal employment, see [M21-1, Part VIII, Subpart iv, 3.A.2.c](), and * circumstances for considering marginal employment, see [M21-1, Part VIII, Subpart iv, 3.A.2.d](). 3 | The rating activity will complete a rating decision to * discontinue entitlement to IU the last day of the month 60 days after notice is provided based on the return to sustained, gainful employment as well as any ancillary issues such as DEA or SMC entitlement, in accordance with [38 CFR 3.105(e)]() and [38 CFR 3.501(e)(2)](), or * continue entitlement to IU based on the lack of evidence showing that the employment is sustained, gainful employment. **Important:** The reasons for decision must discuss the evidence relevant to the determination that sustained gainful employment has or has not been shown. regained employment is reported, but it has not been sustained for 12 months | * refer the claims folder to the rating activity for a rating decision reflecting confirmed and continued entitlement to IU which will be reviewed if sustained employment is shown, and then * refer the claims folder to the authorization activity to notify the Veteran. **Important:** There is no need to establish a review examination to determine if sustained employment is shown. If continued employment is shown when the next annual data match occurs, entitlement to IU will be reviewed at that time. provides wage information but fails to sign the form | * return [_VA Form 21-4140_]() to the Veteran * indicating that the form is incomplete using the _Form Not Complete_ letter, and * advising the Veteran that a signature is required, and * establish a 30 days suspense date. **Note:** If the form is * returned with a signature, follow the most appropriate procedure based on the income reported, or * returned without a signature or not returned, follow the procedures in M21-1, Part VIII, Subpart iv, 3.D.2.a. ### VIII.iv.3.D.2.f. Handling VA Form 21-4140 Returned With Sufficient Explanation of Income When a Veteran returns [_VA Form 21-4140_]() and provides a sufficient explanation of wages, as discussed in M21-1, Part VIII, Subpart iv, 3.D.2.c, complete a rating decision to confirm and continue entitlement to IU and DEA. **Note:** A Veteran’s response indicating no employment and/or wages is unacceptable and considered a fraudulent response when the Veteran is the only beneficiary on the record. However, evidence that sufficiently documents the income is not the Veteran’s earned income, as discussed in M21-1, Part VIII, Subpart iv, 3.D.2.c, is acceptable to support a continued rating of IU. ### VIII.iv.3.D.2.g. Sufficiency of Notice of Proposed Adverse Action The notice of proposed adverse action described in M21-1, Part VIII, Subpart iv, 3.D.1.c and d that is sent as a part of the automated income match process is sufficient for discontinuation of IU due to any of the following: * failure to complete [_VA Form 21-4140_](), described in M21-1, Part VIII, Subpart iv, 3.D.2.a * insufficient response on a [_VA Form 21-4140_](), described in M21-1, Part VIII, Subpart iv, 3.D.2.c, or * return to gainful employment, described in M21-1, Part VIII, Subpart iv, 3.D.2.d.